Understanding equity and how it can unlock value in your home

Many homeowners have a rough idea of what their property is worth, but fewer understand how the equity they’ve built up could support future financial goals.

Whether you’re considering renovations, upgrading, purchasing an investment property or simply exploring your options, understanding equity can be an important starting point.

Let’s take a closer look at how equity works and why it matters.


What is equity?

Equity is the difference between your property’s current market value, and your home loan balance. If your home is worth $900,000 and you owe $300,000, your total equity is $600,000. When you pay down your mortgage or your home increases in value, your equity increases.

While equity is often discussed as a single figure, not all of it may be accessible. As a general rule, lenders will typically allow borrowers to access up to 80% of a property’s value, less any outstanding mortgage balance. This is commonly referred to as usable equity.

Borrowing above 80% of a property’s value may incur Lenders Mortgage Insurance (LMI), which can add to the overall cost of borrowing.


How can you use equity?

For many homeowners, equity is more than just a number on paper. Depending on your circumstances, it could provide greater financial flexibility and help support a range of future goals.

Some people use equity to fund home improvements, such as a new kitchen, bathroom or outdoor entertaining area. Others use it to help purchase an investment property, invest in shares, cover education expenses or finance a major purchase such as a vehicle or boat.

In some cases, homeowners may also choose to use equity to consolidate existing debts. This typically involves increasing a home loan and using the funds to repay higher-interest debts, such as credit cards or personal loans, leaving a single regular repayment to manage.

However, debt consolidation isn’t suitable for everyone and comes with risks that should be carefully considered. Before accessing equity or making any borrowing decisions, it’s important to understand the costs, risks and long-term implications, and discuss your options with a qualified finance professional.


How does it work?

There are several ways homeowners can access equity. Some of the most common options include:

Top-up loan: This involves increasing your existing home loan and accessing additional funds as a lump sum, which can then be used for an approved purpose.

Separate loan split: Rather than increasing your current loan, you may be able to establish a separate loan account secured against your property’s equity. This can help keep borrowed funds for different purposes separate.

Refinancing: Refinancing involves replacing your current home loan with a new one. Depending on your equity position, this may allow you to borrow additional funds while also providing an opportunity to review your interest rate, loan features and overall lending arrangements.

Line of credit: A line of credit allows you to access funds as needed, up to an approved limit. Instead of receiving a lump sum upfront, you can draw on the facility over time and generally only pay interest on the amount used.


Key considerations

Using your home equity will generally increase both your total debt and your regular repayments, so it’s important to understand the impact on your budget before proceeding.

The right approach will depend on your goals and borrowing capacity. A mortgage broker can help you understand your options, estimate your repayments and assess whether accessing equity aligns with your objectives.

It’s also important to consider the risks. Interest rates may change over time, which could affect future repayment amounts. Because your property is used as security for the loan, failing to meet your repayments could put your home at risk.

That said, equity can be a valuable financial resource. Depending on your circumstances, it may provide a way to fund renovations, purchase an investment property, consolidate debt or achieve other financial goals without relying solely on savings.


How has the property market downturn affected equity?

Property prices and equity are closely linked. When property values rise, homeowners often build equity more quickly. When values fall, the amount of equity available may be reduced, particularly for those who purchased recently or borrowed a large proportion of a property’s value.

While national home values have declined in recent months, the impact on equity will vary from homeowner to homeowner. Those who have owned their property for several years and made regular mortgage repayments may still have substantial equity, even if market conditions have softened.

However, recent buyers who entered the market with smaller deposits may be more affected. In some cases, falling property values can lead to negative equity, where a property’s market value is less than the outstanding loan balance.

If you’re considering accessing equity, it’s important to understand your current position and how changing market conditions may affect your options. A mortgage broker can help assess how much usable equity may be available and whether accessing it aligns with your financial goals.


Next steps

Curious about how much equity you may have available? Get in touch for a review of your current position and a discussion about your future plans.

We’ll check the current market value of your home and give you an idea of your usable equity. Your chosen bank will likely want a valuation of your property, then we’ll run through your finance options and paperwork requirements.

Releasing your equity and making it work for you could help you achieve your financial goals, so it’s worth exploring. Reach out today.

Are investors changing course after the new negative gearing reforms?

August 20, 2026
The Federal Government’s negative gearing and Capital Gains Tax (CGT) reforms represents a significant shift in how future property investments will be treated for tax purposes. For investors considering their next purchase, the changes may influence everything from the type of property they buy to how they assess cash flow and long-term returns. Legislated, many investors are reassessing their property purchasing plans and strategies. The core reforms have now passed Parliament, although some of the more detailed implementation rules are still being finalised ahead of their commencement. If you’re looking to buy an investment property down the track, here’s what you need to know about the reforms and how they change the playing field. What is changing? On 12 May, Treasurer Jim Chalmers handed down the Federal Budget , which included major changes to negative gearing and CGT rules. From 1 July 2027: Negative gearing for residential property investments will be limited to new builds. The 50 per cent CGT discount will be replaced with cost base indexation and a 30 per cent minimum tax rate on capital gains. Properties held before the announcement (7:30pm AEST 12 May 2026) will be exempt from the negative gearing changes, while the CGT reforms will only apply to gains accruing after 1 July 2027. How have the reforms affected the market and investors? When the changes were announced, Australia’s property market had already been cooling, driven by a combination of cash rate hikes, housing affordability constraints, the Middle East conflict, and cost-of-living pressures. But the Federal Budget reforms dampened the market even further, with auction clearance rates slipping to levels worse than during the pandemic, and investor confidence dropping. One survey of more than 1,400 Australian investors found that more than 80% believed residential investment property had become less attractive following the 2026 Federal Budget changes. At the same time, 51.5% said they planned to hold their existing investments and wait to see how the proposed legislation evolves. Overall, the survey offers a useful snapshot of investor sentiment, although it should not be taken as representative of every Australian property investor. Key shifts in strategy Since the announcement, there have been early signs that some investors are reconsidering where and how they invest, although it is too soon to say how the reforms will reshape the broader property market over the long term. New builds could attract more attention With negative gearing limited to new builds from 1 July 2027, there are signs that some investors are pivoting towards newly constructed properties. Data from property fund manager Oliver Hume shows the proportion of new-build sales to investors in Victoria has risen above 40 per cent for the first time since December 2024, for example. Experts say investors will likely switch to new units or houses on the outer city fringes, while suburbs in the middle of cities could experience a decrease in stock, potentially resulting in higher rents . Holding or grandfathering existing assets Investors with established properties purchased before 12 May 2026 may choose to retain those properties, as they are exempt from the negative gearing reforms and can continue to access the existing tax treatment that applies to grandfathered properties. These investors can keep negative gearing the property against their wage income and retain the full benefits until they sell. Cash flow could become an even bigger consideration Historically, negative gearing enabled investors to offset losses on established investment properties against their taxable income. But under the changes , investors purchasing established properties would no longer receive immediate tax relief on those losses. The changes may prompt some investors to focus more heavily on rental yield , cash flow and long-term returns when assessing investment opportunities. As a result, positively geared properties could become more attractive relative to investments that rely heavily on tax concessions to support returns. Some may also look for properties with the potential to transition to positive gearing over time as rental income grows. What about the changes to SMSF borrowing? In addition to the CGT and negative gearing reforms, there are new rules around self-managed super fund (SMSF) borrowing. From 10 August 2026, SMSFs can no longer use Limited Recourse Borrowing Arrangements (LRBAs) to buy residential property. Current LRBAs are grandfathered. SMSFs can still purchase residential property outright using cash , and LRBAs can be used to acquire business real property. The changes have been met with mixed reviews among investors, and some critics questioning whether it would make it harder for Australians to build retirement wealth . Some experts also believe that the changes could increase the appeal of commercial property among SMSF investors, although SMSF property investment can involve complex lending, tax and superannuation requirements, so specialist financial, legal and tax advice is particularly important. Considering an investment property purchase? The changes in the budget mean investors may need to think differently about the type of property they purchase, its cash flow and how the investment fits within their broader financial plans. While we can’t provide tax or financial advice, we can help you understand the lending side of the equation. We can review your borrowing capacity, compare suitable loan options and help you understand how different property and loan scenarios could affect your repayments and overall finance structure. If you’re considering your next investment property, get in touch! We can help you explore your finance options so you can make your next move with a clearer understanding.

What’s driving the drop in auction clearance rates?

July 20, 2026
After years of fierce competition, fast-rising prices and crowded auction weekends, the market is beginning to show signs of a shift. More properties are being listed for sale, homes are taking longer to sell, and buyers are becoming increasingly selective about what they’re willing to pay.